Correlation Between Hennessy Cornerstone and New Economy
Can any of the company-specific risk be diversified away by investing in both Hennessy Cornerstone and New Economy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hennessy Cornerstone and New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Nerstone Mid and New Economy Fund, you can compare the effects of market volatilities on Hennessy Cornerstone and New Economy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hennessy Cornerstone with a short position of New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Cornerstone and New Economy.
Diversification Opportunities for Hennessy Cornerstone and New Economy
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HENNESSY and New is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Mid and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund and Hennessy Cornerstone is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hennessy Nerstone Mid are associated (or correlated) with New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Hennessy Cornerstone i.e., Hennessy Cornerstone and New Economy go up and down completely randomly.
Pair Corralation between Hennessy Cornerstone and New Economy
Assuming the 90 days horizon Hennessy Nerstone Mid is expected to generate 1.4 times more return on investment than New Economy. However, Hennessy Cornerstone is 1.4 times more volatile than New Economy Fund. It trades about 0.1 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.1 per unit of risk. If you would invest 1,746 in Hennessy Nerstone Mid on August 30, 2024 and sell it today you would earn a total of 1,133 from holding Hennessy Nerstone Mid or generate 64.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Nerstone Mid vs. New Economy Fund
Performance |
| Timeline |
| Hennessy Nerstone Mid |
| New Economy Fund |
Hennessy Cornerstone and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Cornerstone and New Economy
The main advantage of trading using opposite Hennessy Cornerstone and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Cornerstone position performs unexpectedly, New Economy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in New Economy will offset losses from the drop in New Economy's long position.| Hennessy Cornerstone vs. Hennessy Focus Fund | Hennessy Cornerstone vs. Small Company Stock Fund | Hennessy Cornerstone vs. Large Cap E | Hennessy Cornerstone vs. Eventide Gilead Fund |
| New Economy vs. Artisan Global Unconstrained | New Economy vs. Scharf Global Opportunity | New Economy vs. Ab Global Risk | New Economy vs. Morgan Stanley Global |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
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